Nobody at the News of the World told the editor they thought Milly Dowler was alive and working in a factory in the Midlands while she was on holiday, Rebekah Brooks told the hacking trial today.

If the 13-year-old schoolgirl had been found alive, the Sunday paper would have cleared the front page for the story, the Old Bailey heard.

But Brooks denied she was told of a potential development in the case while she was in Dubai, leaving her deputy Andy Coulson in charge in April 2002.

On her 12th day in the witness box at the Old Bailey, she was questioned by prosecutor Andrew Edis QC about her contact with co-defendant Coulson when she was away.

She said it was clear from phone records that she was involved in an EastEnders splash that week.

Mr Edis asked: "If they had found her (Milly) working in an Epson factory, you as editor would have had to decide what went on the front page?"

"I would talk to Andy Coulson about what was on the front page while I was on holiday," she said.

Pressed by the judge Mr Justice Saunders if she would expect to be told of such a development while she was on holiday, Brooks replied: "I think if it had been believed back at Wapping that they were sure beyond all reasonable doubt that they had found Milly Dowler working in a factory in...Telford, wherever.. that they would have told me, I'm sure. The fact is nobody told me."

Brooks, 45, of Churchill, Oxfordshire, denies any knowledge of Milly's voicemail messages being hacked by private investigator Glenn Mulcaire. She and Coulson, 46, deny conspiracy to hack phones and all the other charges against them.

The court heard no-one passed on the information about Milly possibly being alive in Telford to police until the following Saturday.

Mr Edis asked Brooks: "Nobody tells the police about the voicemail until the Saturday afternoon. Would you regard that as a big decision?"

She replied: "If anyone had thought they had genuinely found Milly Dowler alive, I would."

He went on: "There would be nothing to stop them - phone hacking was not illegal as far as you knew?"

Brooks responded: "At the time I did not know it was illegal, but it was obviously a serious breach of the code (of conduct) even if it had been illegal."

"If before Milly Dowler's phone was accessed, if someone had put a set of circumstances to me and said hypothetically it was in the public interest, I might have said yes.

"But if anybody had told me Milly Dowler was alive my instinct would have been to tell police immediately for the sake of the parents and not delay for a second."

Earlier, Brooks told the jury she had not taken a special interest in the missing teenager because guidance from police was that it was not a Sarah's Law type case.

It the time, they were wrongly looking at Milly's father as a potential suspect, when in fact Milly had been murdered by a violent paedophile in the community.

However, when pressed by Mr Edis, she did confirm she was extremely interested in the story.

Mr Edis showed Brooks an email from then managing editor Stuart Kuttner to the Surrey Police chief constable in which he flags up eight convicted sex offenders living near Milly's home and school.

He asks if Surrey Police "regard any of them as suspects" and also says the newspaper has "repeatedly offered a reward". Police reply saying they would "keep a reward in reserve".

Brooks was later asked by Mr Edis about what was said at a birthday party for Coulson.

A witness had claimed she had a laugh about phone hacking, with former Mirror editor Piers Morgan saying he had hacked her phone.

But Brooks said: "I do not remember Piers Morgan saying he had hacked my phone. He may have said it, I just don't remember."

Brooks said she was surprised the witness had not mentioned a story about a Hutton Inquiry leak which came up in conversation during the 2004 party.

She told the court she had heard rumours of unscrupulous journalists hacking phones in the early 2000s, but insisted: "My newsroom I felt under my editorship was a clean ship."